Vested interests blocking industry reform

Opinion Piece by Dr Paul Wright, Chair of Cattle Producers Australia

It is astonishing how little real progress has been made in fundamental cattle industry structural reform given the overwhelming weight of evidence supporting the need for reform. As Mr Norton says, ‘old ways are entrenched, and interests are vested’!

Two recent Senate inquiries and the ACCC Cattle and Beef Market Study into the red meat industry structures concluded that Australia’s cattle producers are not adequately represented under the present systems and structures and that fundamental changes must be made.

The need for a complete root and branch review of Australia’s Red Meat industry organisational structures have now been recognised by the Federal Government, having announced the establishment of a Red Meat MoU Review Taskforce in September this year.

As MLA Managing Director, Mr Richard Norton said in his final report to the MLA AGM, “Industry must embrace change and the opportunities it presents. Often change is difficult particularly when old ways are entrenched, and interests are vested.” He went on to say that industry has an MoU that sets out the roles and responsibilities for the red meat peak councils and service providers and that the review must resolve industry responsibilities and ownership of industry roles.

During a panel discussion at the recent Red Meat 2018 Forum in Canberra, I questioned Chair of the Red Meat Advisory Council (RMAC), Mr Don Mackay on how he manages matters of commercial conflict between processor and live exporter Board member interests. Mr Mackay replied by acknowledging that members of the Board of RMAC are all competitors and the Board is often unable to reconcile the conflicts of interest that exist! Mr Mackay acknowledged that RMAC advises Government on important issues such as live sheep and cattle exports but conceded that processors supported the closing of the live export trade trade stating that it is the role of peak bodies to deal with these issues.

These inherent conflicts of interest go to the heart of RMAC’s structural deficiency and underpins its inadequacy as a one stop advisory body for Government.

It is important to acknowledge that these “competitors” are sitting on over $40M of industry funds and according to the RMAC website provide “thought leadership” for the Red Meat sector. The cattle producer share, of this $40M is significant indeed and raises the relevant question, does this “thought leadership” by RMAC translate into increased returns for cattle producers?

The fact that RMAC was unable to reconcile the conflicting commercial interests of processor and producer members on their board during the 2011 live export ban to Indonesia highlights the level of dysfunction of this structure. The 2014 Grass-fed levy Inquiry recognised this failure by RMAC to advise government. This dysfunction contributed to the imposition of a live cattle export ban to Indonesia, delivering windfall profits to the processing sector largely at the expense of cattle producers, are we now seeing history being repeated with the current situation with sheep live exports?

The 2017 ACCC Cattle and Beef Market Study identified a lack of transparency in some cattle marketing systems and charged existing industry representative structures with the responsibility of implementing necessary reforms. In May 2018 an ACCC update report concluded that these bodies were unresponsive to change and in its media release the ACCC pointed out that the inaction of industry representative participants demonstrated that they either did not understand the value of transparency or it did not suit their interests to make improvements.

Twenty years have elapsed since the current red meat industry structures were put in place and our economy has changed enormously during that time and consequently, it is imperative that the current review of the Red Meat Industry MoU comprehensively addresses all these issues if concerns of cattle producers are to be alleviated and the findings and recommendations of the Taskforce are to be accepted by industry and Government

It is clear that the current structures do not adequately represent the interests of Australia’s cattle producers who need a truly democratic representative voice to control their levies and their future.

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Cattle Producers Australia Ltd (CPA) is the new voice on issues that affect grass-fed cattle production businesses. We offer a new era of leadership in advocacy and governance for the grass-fed beef industry.